Category: Entrepreneurship

Business School Way of Life…Revisited

My previous post from Saturday generated the most feedback of any of my posts so far.  I received tons of emails from some people who agreed and others who thought I was full of it.  I’ll try to clarify and expand further with this post.

I don’t think its wrong to be rich or wrong to want to get rich.  Where it becomes a problem is when the main or only goal is to get rich.  In situations like this, people cut corners and look the other way to make a quick buck.  They do not do the right thing or build for the long term.  As my friend Joe, an Indiana business school grad said, “its becomes poker to them.”  As in all get rich quick schemes, at some point, someone ends up holding the bag.
My problem with the Business School Way of Life is that, for many, the main and only goal is to get rich.  Getting rich should be the byproduct of doing something that is useful and that you like to do.  If you create something worthwhile that people want, odds are, society will compensate you for your efforts.  
Business school is not the only area of the American economy that is prone to this disease.  During the tech boom, people started companies with the express goal of getting rich, rather than building a useful product.  In the end, the bubble burst and the people who were in it solely for the money ended up failing.  Athletes who are in it only for the money don’t seem to do as well as those who love the game.  Construction workers who cut corners to make a quick buck fall victim to the same disease. 
At least in previous bubbles, the people who tried to “get rich quick” left behind lasting infrastructure.  The railroad tycoons connected America.  Oil barons found new resources to lead the world into the automobile age.  The fiber optics companies paved the way for the Internet.  What has the finance industries’ boom and bust left us with?
My previous post was more a critique of American culture as a whole, using the business school way of life as a lens to focus on the problem.  It seems to me that many people my age now expect to love their jobs AND get rich without putting in full effort.  It seems to me that people in previous generations expected to have to grind away in jobs that they did not necessarily love in order to succeed.  I am not suggesting that everyone should go to work in a big company and grind away in corporate America.  On the contrary, I think it would be great if more people took the risk of joining smaller companies out of college or even started their own.  This way, they would be more focused on building something lasting, rather than “playing poker” with other people’s money.
I may have been too harsh on business schools and the people who attend them, but I truly believe that the world would be a better place if more people decided to go into other, more productive careers.  If more people would stop trying to get rich quick and instead tried to build something new and interesting, maybe we wouldn’t be in this mess that we are in now.  I think that if current college students and recent grads got back to the basics of trying to solve problems and build interesting and worthwhile things, they, along with us, would be better off.

The Business School Way of Life

John Talton’s recent article on called “Business Schools & Financial Services: Oh The Harm They’ve Caused” is a great article on a subject that I have been meaning to write about for awhile now.  Talton’s main premise is that:

…for a generation or more…so many of our brightest college graduates have gone to Wall Street to get rich, rather than creating something useful or beautiful, rather than helping to strengthen and reinvent industries that actually produce something. Those with less talent, connections or family money have mimicked them, choosing to work in “financial services.”

Tellingly, they are enrolled in highly publicized “ethics” courses. And year after year, the top graduates go into finance. Most graduates move into settings where they continue their socialization into being an unquestioning cog in the matrix. The motivation is at once banal and uniform: I’ve talked to many classes where students say their main goal in life is to “get rich.”

As a Poli Sci major who started and ran businesses while in college, I became disillusioned with many of the students who took their classes in Grainger Hall and the courses that they were enrolled in.  By Sophomore year, it was clear to me that many, if not most, of these students were on the “get rich quick” plan and had no interest in building anything interesting or worthwhile.  They wanted to become cogs in investment banks or work in financial services.
Their goals were so completely different from mine, as were their values.  They valued name over actions and flair over substance.  They viewed business school as the next step to bonus millions, rather than a place to learn how to actually do something.  To be clear, not everyone who I met in the business school fits into this category.  I can think of many counter examples of smart people who were genuinely interested in the inner workings of finance, real estate or accounting but in my experience, the vast majority fit into the “get rich quick” group.
Michael Lewis’ great article from the December edition of Portfolio called “The End of Wall Street” visits many of the same themes.  He is hopeful that with the recent downturn, many of these smart people will be dispersed into other, more productive industries.
I wholeheartedly agree.  The best thing that could happen during this recession would be for the extremely smart people currently working in finance to move into other industries.  Imagine if these smart people were unleashed to tackle other problems like the future of the auto industry, green technology, education or any other huge problem.  I know many will take those last few sentence as sarcasm since these same people had their hands in the financial meltdown, but I am hopeful that they might be more successful in other industries.
It would be great if the best and the brightest college students just entering college now eschewed not only the business school, but what I’ll call “the business school way of life” and learned common sense life lessons.  Instead of doing “finance” they learned history and politics and how the world actually works.  These smart people would be poised to lead America’s next generation of companies that actually create, invent and innovate, rather than just move money around.  I believe that America, not to mention the world as a whole, would be much better off if these changes occur.

Are Big Ideas Really Rare?

I just finished reading a May 12th article from the New Yorker by Malcolm Gladwell called In the Air: Who Says Big Ideas are Rare?

Gladwell profiled a couple of guys who started a company called Intellectual Ventures, a company devoted to the “belief that combining capitalism and invention will benefit the world with more and better innovations as well as create financial rewards for investors.”
They basically get the smartest people they know, send them reading materials a few weeks prior and just get them all in a room to talk about a topic.  When they first started these brainstorm sessions, they thought that they might get 6-8 good ideas per event.  They found that they were getting hundreds.
Since 2000, IV has developed 3,000+ ideas that they feel have the ability to change the world.  They found that they could create “geniuses” by bring all of the parts of a genius together in a room and that big ideas were really a dime a dozen.
Gladwell argues that their works also helps prove multiples:
“This phenomenon of simultaneous discovery—what science historians call “multiples”—turns out to be extremely common. One of the first comprehensive lists of multiples was put together by William Ogburn and Dorothy Thomas, in 1922, and they found a hundred and forty-eight major scientific discoveries that fit the multiple pattern. Newton and Leibniz both discovered calculus. Charles Darwin and Alfred Russel Wallace both discovered evolution. Three mathematicians “invented” decimal fractions. 
Oxygen was discovered by Joseph Priestley, in Wiltshire, in 1774, and by Carl Wilhelm Scheele, in Uppsala, a year earlier. Color photography was invented at the same time by Charles Cros and by Louis Ducos du Hauron, in France. Logarithms were invented by John Napier and Henry Briggs in Britain, and by Joost Bürgi in Switzerland.

“There were four independent discoveries of sunspots, all in 1611; namely, by Galileo in Italy, Scheiner in Germany, Fabricius in Holland and Harriott in England.”

If Gladwell is correct, and I think he is, it has big implications on how startups and even large companies should do business.  The previous method of bring ideas to market was someone thinking of an idea, pursuing it, then possibly getting it funded by a VC.
Should VCs or others simply fund smart people to come up with ideas instead of waiting to see if they pan out at all?  This would give VCs better valuations as they are able to get in on the ground floor, before more value is created.
What also interested me is that a fellow UW entrepreneur has used this approach to help large companies solve problems.  Anand Chhatpar, a UW alum, founded a company called Brainreactions.  Its purpose was to bring smart college students together to create “fresh, actionable, innovative ideas” for companies who needed solutions to problems.
I was one of the initial brainstormers at Wisconsin back in 2006 and had a great time at the two sessions I attended.  They would get 4-6 smart college kids together in a room and present them with a problem.  The brainstormers would then try to come up with any solution to the problem that they could think of.  Much like IV in Gladwell’s article, these sessions were wide ranging, as we touched on just about any subject we could think of.  The amount of ideas we generated in a two hour period was astounding.
Brainreactions has been pretty successful so far at generating some great ideas for companies.  It will be interesting to see if this method of idea generation catches on beyond IV and Brainreactions.
I, for one, am hoping it does.

Entrepreneur Deli

A few weeks ago, Corey, one of my two partners from ExchangeHut, and I were asked to talk about our experiences with ExchangeHut for the Entrepreneurship Deli, an event put on by Wiscontrepreneur and the Office of Corporate Relations at UW. It was a “speed dating” format where young entrepreneurs from companies like Flying Cart, Powered Green, Sconnie and Brazen Careerist talked to people from the community about our experiences starting and running companies.

We were tasked with talking about boostrapping and the lessons we learned as college entrepreneurs. I created this list from our list of hundreds of lessons we learned during our three years of running ExchangeHut.

Here’s my list:

1. Don’t be afraid of the competition

2. Research, research, research

3. Don’t overestimate sales, market penetration or adoption rates: take your projections and cut them in half. Then cut them in half again.

4. Stay Focused: do one thing extremely well, rather than many things poorly

5. Legal work is essential: an hour of advice now will be worth weeks of hassles later

6. Know who you are dealing with: do your due diligence on all aspects of your business

7. Don’t do business with unethical companies or people: a quick buck now will bite you much harder later

8. Make a plan, then execute it

9. Mixing business with friendship seems great, but doesn’t always work

10. Give credit to employees when the going is good, take the blame when its not